[SYDNEY] The Australian dollar hit a new three-year peak against the pound on Friday as sterling took a beating amid fears of a "hard-Brexit" departure from the European Union.
The pound was down 1.3 per cent against the Aussie at A$1.6417.
Sterling seized centre stage in early Asian trading, plunging to three-decade lows as a break of key technical support levels triggered a wave of stop-loss orders.
Earlier, the pound suddenly dropped 10 per cent from levels around US$1.2600 to US$1.1378 versus the US dollar on some trading platforms, but bounced back to levels around US$1.2500. After some choppy moves afterwards, the pound was last trading at US$1.2432 , still down 1.5 per cent on the day.
The Australian dollar edged 0.1 per cent lower to US$0.7576, near two-week lows as the greenback gained on the back of encouraging data, bolstering expectations of a Federal Reserve rate hike this year.
If the falls are sustained, it would be the Aussie's worst weekly performance since July 22, as investors shift focus to the Fed.
First-time filings for US jobless benefits unexpectedly fell to a near 43-year low, the US Labor Department said.
That lifted the US dollar to a two-month high.
"It's not really about the Aussie dollar at all. It's about the moves in the US dollar, better US data, increased expectations of a December Fed rate hike," said Greg McKenna, chief market analyst at AxiTrader.
The US payrolls report is due later in the day and is expected to show 175,000 jobs were added last month.
Domestic data this week showed a rosy picture of Australia's economy, boosting expectations for gross domestic product growth of more than 3 per cent for the year.
However, a resilient Aussie, up about 4 per cent this year, could spoil the party. It fell nearly 11 per cent in 2015 and more than 8 per cent the year before.
"The external sector has recently been supported by earlier falls in the Australian dollar, but the more recent strengthening means this support may not last," said Kate Hickie at Capital Economics.
Elsewhere, the Aussie stood tall against its New Zealand cousin, rising 0.5 per cent to stay near a two-month high.
The New Zealand dollar fell for a fifth straight session to a fresh two-month low on Friday. It slipped below key chart support of US$0.7200 to trade down 0.3 per cent.
The kiwi is also on track for its worst weekly performance in two months.
New Zealand government bonds eased across most of the curve, following US Treasuries. Yields were three basis points higher at the long end but fell 0.5 basis points at the short end.
Australian government bond futures slipped too, with the three-year bond contract down two ticks at 98.40. The 10-year contract down one tick to 97.86.